UK wagering firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK companies as sports betting starts to spread in America.
From Tuesday, new rules on wagering entered effect in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
The market sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.
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But the industry says counting on the US stays a risky bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.
"It's something that we're truly concentrating on, but similarly we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external published in January.
Firms are hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to regional lawmakers.
That is anticipated to result in significant variation in how companies get accredited, where sports betting can take place, and which events are open to speculation - with huge implications for the size of the market.
Potential earnings ranges from $4.2 bn to almost $20bn every year depending on elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I think most individuals ... are looking at this as, 'it's a chance but it's not going to be $20bn and it's going to be state by state and it's going to take some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual income.
But bookies deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.
In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been sluggish to legalise numerous types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting wagering is usually viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the previous primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a specialist, he states UK companies need to approach the market thoroughly, selecting partners with care and preventing bad moves that could lead to regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for company," he says. "It really depends on the result of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of profits as an "integrity fee".
International companies deal with the included challenge of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to defend their turf.
Analysts say UK companies will need to strike partnerships, providing their expertise and innovation in order to make inroads.
They point to SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has actually been buying the US market considering that 2011, when it purchased 3 US companies to establish an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a household name in Nevada however that's not necessarily the goal everywhere.
"We certainly plan to have a very significant brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and potentially who our regional partner is."
"The US is going to be the biggest sports betting wagering market worldwide," he included. "Obviously that's not going to occur on the first day."
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